By Hector-Roosevelt
Ukegbu
The Federal Government seems to be floundering with its economic
policies, showing no particular direction or strategy. This, perhaps, should
not be surprising given that President Buhari came into office with a fixed
mindset on how the economy should be run. And, he didn’t want any intellectual
opposition from anyone. So, in forming his Cabinet and Inner Circle, he gave short shrift to
professional economists and packed his government predominantly with lawyers –
to the extent that the Minister of Budget and National Planning is a lawyer,
no less.
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*Buhari |
Happily things are changing, but not soon enough. It will take
some time to reverse the damage done by the untutored, time-wasting attachment
to a two-tiered currency market, with one category’s exchange rates fixed by
fiat. Circumstances have forced President Buhari to finally listen to economists
he previously said had been talking over his head, not to his head.
But, certain economic policies of this government point glaringly
to the misfortune that economic policies are geared more to the government’s
saving face politically rather than putting the country on a sure economic
footing for the long haul.
Almost with glee, the Information minister has stated that with
the decisions to begin paying N5,000 monthly to one million unemployed
Nigerians, and hiring 500,000 graduates to become school teachers, the Buhari
government is now fulfilling its campaign promises. In his recent Op-Ed article
in the New York-based Wall Street Journal business newspaper, President Buhari
added that the government is now taking steps to refloat the economy.
The Central Bank itself is jumping in with a program it says will
fund millions of young entrepreneurs. All these policy actions are misguided
and are not what the Nigerian economy needs to grow again, and sustainably into
the future.
Take the issue of refloating the economy, a Keynesian strategy
used since the Great Depression era in the West and proven to help lift struggling
economies. The U.S. Federal Reserve Bank (the Central Bank of the United States) pumped in tens of billions of
dollars monthly for several years to “refloat” the U.S. economy, and cut its interest
rates for financial institutions to zero – what it called an economic
“stimulus” program. Years before the world financial meltdown of 2008, the
Japanese economy was mired in stagnation as the citizens just preferred to
save rather than to spend. The Tokyo
government then embarked on a policy to give out cash to its citizens so that
they could start spending. These programs in the U.S.
and Japan
were designed to increase consumer spending, so that manufacturing and
construction jobs could rise as consumer demand expanded, borrowing costs were
very low, and loanable funds were abundant.